Design: an ingredient to growth

National Survey of Firms 2002

The last three years have seen difficult times in the economy, with growing
competition from overseas and a strong pound making life difficult at home
and abroad. Yet despite this, the re are companies who have been able to grow.
The annual National Survey of Firms conducted by the Design Council has for
the first time shown the link between growth and use of design.
The majority of companies in the UK are small and medium enterprises and
for them the importance of design has closely matched the economy's
fluctuations. The number saying it is integral to their business or has a significant
role to play has fallen over the last three years and this has dragged the overall
opinion of companies in the UK to an all time low. Only 24% of companies in
the UK say that design is integral/significant to their business. The chart below
maps the survey alongside the FTSE100 index over the past three years.

Design has an integral/significant role to play

in UK firms

46%
38%
34%

Source: PACEC

Source: National Survey of Firms 2002

But the overall figure for UK companies as a whole hides the real value
design is giving to some companies.
Companies that have seen rapid growth in the last 12 months rate design,
innovation and creativity higher as a key ingredient of business success than
those companies who have seen moderate to no growth. Seventy-one per cent
of them also say design is integral/significant to their business compare d to
the national figure of just 34%.

Rapidly growing companies are also deriving more benefits from design activity
than their less successful counterparts. The following table shows the extent to
which design, innovation and creativity have contributed to various aspects of
business in the last three years.

Design, innovation and creativity have contributed to a great/fair

extent in the last 3 years to the following.
UK Firms in
general

Static
companies

Rapidly
growing
companies

Increased employment

13%

9%

38%

Increased turnover

15%

10%

38%

Increased profit

16%

9%

33%

Reduced costs

10%

8%

29%

Improved quality of
products/services

20%

5%

56%

Development of new markets

17%

3%

38%

Increased market share

15%

4%

39%

Improved internal comms

9%

7%

14%

Improved comms with

customers

24%

10%

50%

Improved image of
organisation

22%

5%

51%

Competitiveness

18%

10%

33%

Productivity

18%

8%

48%

New products/services

19%

8%

52%

Source: National Survey of Firms 2002

The results also show that a larger number of firms that have grown rapidly
in the last 12 months (83%) have introduced a new product/service in the
last three years. The figure for static companies is only 27%. This may help
explain some of the differences seen above.

Design activity in UK firms

UK Firms in
general

Static
companies

Rapidly
growing
companies

Dedicated design
department

16%

4%

30%

Employ internal designer(s)

but no department

5%

2%

13%

Employ external design

consultant(s) on ad-hoc basis

16%

19%

30%

Other approaches

13%

8%

18%

No design activity

51%

67%

9%

Source: National Survey of Firms 2002

Expenditure on design is also closely linked to growth, with rapid growers

showing the largest increase in design expenditure in the last 12 months.
Fifty-five per cent say spending has increased, compared to only 4% of
static companies and 20% overall.
This may reflect rapid growing companies' strategy, which is based on
anticipating changes in their market as opposed to reacting, which the
majority of static companies admit to.
The approach to winning new customers is also more aggressive, with the
majority of rapid growers basing their strategy on competitive pricing and
better products and services as opposed to one or the other.
Research on markets, competitors and customers is also undertaken more by
rapid growers than it is by static companies or the national norm.

Research undertaken by UK firms

UK Firms in
general

Static
companies

Rapidly
growing
companies

On markets

33%

18%

74%

On customers

36%

20%

76%

On competitors

29%

16%

63%

Source: National Survey of Firms 2002